Company Reports

We trim our fair value estimate for Corporate Travel by 2% to AUD 20 per share, reflecting a downgrade to our medium-term forecasts for Europe. However, shares in the no-moat group remain cheap, trading at an 18% discount to our intrinsic assessment.

A firm uses external travel management services when its own travel activities become too complex and time-consuming to organize, co-ordinate and track, not to mention the compliance and governance issues that must be managed. Covid-19 has also thrown up a myriad of regulatory and safety measures across different regions that can also affect a corporate travel itinerary. A corporate travel management company can handle all these activities. In the current postpandemic environment, it can also incorporate regulatory health and safety information into its technology platform with the aim of increasing traveler and business confidence. All this allows a corporate client to focus on its core business, while benefiting from travel cost savings via a travel management company’s scale, geographical spread and technological capability.

We cut our fair value estimate on Corporate Travel by 9% to AUD 20.50 per share. The reduction is all due to a permanent rebasing of forecast contribution from the UK Bridging contract. Just six months after being "awarded," the humanitarian and crisis travel logistics project is now set to deliver a paltry annual EBITDA of AUD 5 million. This is a huge drop from our prior forecast of AUD 23 million and a far cry from management's AUD 30 million expectation.

A firm uses external travel management services when its own travel activities become too complex and time-consuming to organize, co-ordinate and track, not to mention the compliance and governance issues that must be managed. Covid-19 has also thrown up a myriad of regulatory and safety measures across different regions that can also affect a corporate travel itinerary. A corporate travel management company can handle all these activities. In the current postpandemic environment, it can also incorporate regulatory health and safety information into its technology platform with the aim of increasing traveler and business confidence. All this allows a corporate client to focus on its core business, while benefiting from travel cost savings via a travel management company’s scale, geographical spread and technological capability.

Shares in Corporate Travel remain undervalued, trading at a 15% discount to our unchanged AUD 22.50 fair value estimate. Recent developments support our earnings expectations driving this intrinsic assessment.

A firm uses external travel management services when its own travel activities become too complex and time-consuming to organize, co-ordinate and track, not to mention the compliance and governance issues that must be managed. COVID-19 has also thrown up a myriad of regulatory and safety measures across different regions that can also affect a corporate travel itinerary. A corporate travel management group can handle all these activities. In the current postpandemic environment, it can also incorporate regulatory health and safety information into its technology platform with the aim of increasing traveler and business confidence. All this allows a corporate client to focus on its core business, while benefiting from travel cost savings via a travel management company’s scale, geographical spread and technological capability.